Crypto markets came under renewed selling pressure after US producer inflation rose more than expected. Bitcoin fell as low as $79,730 before recovering to around $82,000, while roughly 176,500 derivatives traders were liquidated for a combined $939.24 million. Traders are now weighing the Federal Reserve's interest-rate path against Bitcoin's ability to hold the $80,000 level.
US PPI Posts Its Biggest Monthly Rise Since 2022
US producer prices rose 1.3% in September, the largest monthly increase since March 2022, according to Labor Department data. The annual increase reached 6.3%, close to a four-year high. Core PPI, excluding food and energy, climbed 0.7% from August, above the 0.3% market expectation, and rose 5% year over year.
The figures came after consumer inflation was reported at 3.7%, prompting closer scrutiny of whether price pressures are spreading beyond energy. Energy prices rose 10.8% in September, increasing costs across transportation, manufacturing and distribution.
Ricky Ho, chief investment officer at a single-family office, said the stronger core PPI suggested that businesses were facing broader cost pressures. Companies may absorb those costs and accept lower margins or pass part of the increase on to consumers. That process could keep inflation elevated for longer and make it harder for the Federal Reserve to ease policy quickly.
Market expectations for a rate increase at the Federal Reserve's October 27-28 meeting shifted after the inflation data. Following Wednesday's consumer-price report, futures briefly priced in an almost 50% chance of an October hike. After Thursday's stronger PPI reading, that probability fell back below 30%.
Can-Luca Köymen, an investment strategist at Swiss digital-asset bank Sygnum, said the core PPI data reinforced the inflation signal from the CPI report. In his view, an October rate increase had moved from a tail risk to a possibility requiring closer attention.
The bond market moved in the opposite direction from what the inflation data might suggest, with the yield on the 10-year US Treasury falling to about 5.06%. Allianz chief economic adviser Mohamed El-Erian attributed part of the decline to investors moving into government bonds as technology stocks came under pressure. He also pointed to rising concerns about the resilience of technology investment, credit conditions and high borrowing costs.
Options Traders Turn Defensive Around $80,000
Nick Forster, founder of derivatives data platform Derive, said the implied probability of Bitcoin falling below $80,000 before Friday's expiry had risen to 18.4% over the previous 24 hours, from 9.5%. The probability of Bitcoin reaching $100,000 before Christmas fell from 12.5% to 9.7%. The implied probability of Ether rising above $3,000 by year-end stood at 14%.
In the three hours after Wednesday's CPI release, trading volume in Bitcoin and Ether options on Derive reached $129 million, 12 times the volume recorded in the preceding three hours. One trader paid $151,000 for a put spread covering 500 Bitcoin, representing approximately $41 million in notional exposure. Forster said the position could generate a maximum net profit of $849,000 if Bitcoin fell below $78,000 before Friday morning.
Some traders were also closing longer-dated bullish positions. That included a block sale of a spread involving 1,293 March 2027 Ether call options.
Friday's Bitcoin options expiry covers about $1.3 billion in positions, with put exposure concentrated between $76,000 and $80,000. Mauricio Di Bartolomeo, co-founder of Ledn, said a much larger expiry is scheduled for October 30, when roughly 140,000 Bitcoin options contracts with a notional value close to $12 billion are due to expire. That would represent about one-third of Deribit's open Bitcoin options interest.
Among contracts expiring at the end of the month, call options on about 25,000 Bitcoin are concentrated around a $95,000 strike price. A rebound toward those levels could increase hedging-related buying demand. The same options set has a maximum-pain level near $78,000, leaving a substantial concentration of derivatives positions below the current market price.
CoinGlass data showed that 176,506 traders had been liquidated during the move. The largest single liquidation occurred on Binance and involved a BTC-USDT position valued at $12 million.
Traders will also focus on remarks by Federal Reserve Chair Kevin Warsh at an International Monetary Fund meeting in Bangkok. His speech is scheduled for 11:30 p.m. Eastern time on Thursday, close to Friday's Bitcoin options expiry and before the Federal Reserve enters its pre-meeting communications blackout. Attention is centered on rate signals, the $80,000 support level and the position adjustments that could accompany the large options expiry at the end of the month.